Farmer Gene DeMars has taken to running a railroad.

The Burlington Northern wanted to abandon a 66-mile line between Geraldine and Spring Creek Junction in Montana, but the wheat growers who lived in the area believed they needed the service.

The state negotiated a deal with Burlington Northern in which the state took over ownership of the roadbed and the track. State officials also persuaded the railroad to provide $8 million to the wheat growers, who became the owners and operators of a railroad operating on the old Burlington Northern spur.

One underlying assumption of deregulation is that where there are markets -- even small markets -- appropriate services will spring up to serve them. A big airline may not want to provide service to Podunk, Tex., but someone with a small aircraft may fill the need.

DeMars, who is chairman of the nonprofit Central Montana Railroad, thinks the new entity can provide service at reasonable rates and make enough money to stay in business. "It's probably in better shape now than in 40 years. We put in 60,000 ties and rerailed about 14 miles."

The company started operations June 1 of last year. Its early operations have been costly, because they included moving a large railroad trestle 22 inches to the east. The ground had shifted under the trestle and put it out of alignment. The company also has more employes now (about two dozen) than it will require once it is better established, DeMars said. Then it will get by with four or five workers.

Can it be self-sustaining? "I think in an average crop year we can," he said.

Sometimes the service that has arisen to replace a carrier freed by deregulation from serving an area proves not to be the long-run answer. Thorton Cooper, an attorney with the West Virginia Public Service Commission, cited the example of a small bus carrier who said he would pick up one route that Trailways wanted to abandon.

When it appeared there might be alternative service, it became harder for the state to continue to protest the proposed abandonment, according to Cooper. Later that service failed, he said.

"He couldn't keep it up, and his wife died," Cooper said of the carrier. "Even when he was in operation, he didn't go to all the places he was supposed to go. He wasn't dependable."

"If you read an ICC opinion, they talk about the free market, and if there's a need for a service, it will spring up, although it may be a smaller service," he said. "They're saying a place like West Virginia can just be served by marginal carriers."